Soft skill is cost avoidance, not investment

The world is getting flat, said Thomas Friedman several years ago. It is true. The world is getting connected in ways never seen before. The world is moving from a hard-wired connected environment to a softer one.

We then see this impact of this changes to the expectation of people’s competence. When the world was not yet this flat, to get a technical qualification is almost about everything. Now, almost everyone agree that these hard skills are necessary, but won’t make any significant difference without soft skills.

It is convincing argument, and to a large extent, quite true. But, I do critically challenge myself to question the commonly accepted thesis that soft skill development is an investment. It is most likely an investment to each person who got developed, for sure. But I don’t think it is the same for the business, which actually fill the investor role.

When a business invest n improving hard skills, it is obviously about improving the behaviour that directly define the measurable working process, and also the productivity rate. Soft skill on the other hand is about some quality that is less tangible, and often times does not have direct impact to productivity. This is simply because soft skill can provide more value on the long run, on top of the core benefit provided by the technical skill. Soft skill is about competitive edge.

Thus, it is only fair to see that soft skill is avoiding cost of losing with competitor, the cost of losing future opportunities, or losing good people from within the organisation. Soft skill often times can speed up the process, cut risk and potential problems or keep up a trend that otherwise will decline if left alone to natural flow of things. All of this is not about adding value, actually. Rather, soft skill evidently shows how we can reduce or even avoid potential risk or cost, when managed properly.

So, I think it is would be wise to consider a different view here. Instead of trying to justify how soft skills development become a good business investment, we perhaps should try to define the true nature of it as a cost avoidance instrument.

2 thoughts on “Soft skill is cost avoidance, not investment”

Hi Pak James,
Agak panjang nih, tapi logika mikir saya gini:
I believe all investments are avoiding costs and anticipate future needs, but not all yield returns of investments. Assuming when talking about investments, the keyword is ROI. Then I guess you chose to categorize soft skills in such way that there won’t be any return of costs whether or not you avoid it.
Let’s imagine a printer, as a form of company’s investment. Company needs black & white printer, but choose color printer instead, “just in case we need to…” If BW-Color printer is irrelevant then maybe laser jet and 3D printer.
We won’t likely use the printer’s extra capabilities til we have to. Therefore, the printer should be judged on the company’s urgent needs, such as how many pages can it print before it gives up, how efficient is the toner use, how durable, how big, and so on. The printer’s ROI isn’t likely the “what else can it does” but most probably the “what can it does”, yet by making purchase judgment based on “what else”, we can avoid extra money we would have to dispense in the future–avoiding costs.
Similar to printer, human resources are seen as an investment to the company, they are tools and assets–however inhuman it might sound; pardon the language. HRD would likely recommend human A to the direct manager/ supervisor who will use his/her skills on a daily basis.
There are basic requirements of the job, which is like the printer’s “what can it does” to the company, or the hard skills. The employees’ ROI would then be their immediate usefulness to the company. Their soft skills would be seen as company’s investment that are only useful in times of needs, and by having such investments before such time, we can avoid extra efforts and spending we need to do had we not invested in any.
The ROI measurements, however, would differ in one company and the others. Also I do believe any form of investment, even people’s soft skills are subject to value depreciations.

hehe, agak panjang tapi sangat berisi…what could be better than that, isn’t it?
Thanks for the excellent analysis, Angga!
And yes, I fully agree with you. The main idea I would like to provoke through this post is that our investment in human capital is more on what a qualified person can do, which later added by the potential other things he or she can do further. I like and fully fit into with your analogy of printer! That is the process we try to measure as recruitment – and turn over – cost. This particular cost is essentially the off set that may resulted for not having necessary qualification ready within the business.
Therefore, it is not exactly the same with investing a new production machine that will definitely lead to the increase of capacity and output – or revenue.